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Big banks are being dragged down by tepid lending

An index that tracks the major banks is underperforming the broader market. And not just in light of the stock market rout — it's underperformed for most of the past year.

Why it matters: The higher interest rate environment that's spooking investors is supposed to be good for banks. They can charge consumers more for lending, boosting profit. But the advantage is not showing up in these companies' stocks.

Why the slump in bank stocks? Analysts are pointing to banks' loan businesses, which has not been as strong as expected in a booming economy.

Last quarter, embattled Wells Fargo reported declining loan growth and recently warned at an investment conference that this quarter probably would not be any different.

What's going on: It isn't just that consumers are taking out fewer loans for fear of higher interest payments. There is more competition for lending from companies like Quicken Loans to private equity firms.